Department of Education: Status of Achieving Key Outcomes and	 
Addressing Major Management Challenges (29-JUN-01, GAO-01-827).  
								 
This report reviews the Department of Education's performance	 
report for fiscal year 2000. Specifically, GAO examines 	 
Education's progress in achieving selected key outcomes that are 
important to its mission. Given the lack of performance data,	 
explanations, and strategies to meet unmet goals in the future,  
it was difficult for GAO to assess progress. The lack of a	 
performance plan also hindered GAO's efforts to assess the	 
department's progress. Specifically, GAO found that it was	 
difficult to assess Education's progress in achieving the six	 
selected outcomes due to the lack of fiscal year 2000 data for	 
many of its indicators. Consistent with its findings in reviewing
Education's performance report from last year, GAO found that	 
Education had no goals or measures for preventing fraud, waste,  
mismanagement, and error in the student financial assistance	 
programs. Although the Office of Student Financial Assistance has
established a target of being removed from GAO's high-risk list, 
there were no corresponding goals or measures in the department's
interim report. However, Education has revised its strategic plan
to incorporate an objective of ensuring financial integrity	 
within the department. Like last year's report, GAO found that	 
there was no discussion in the interim report on strategic human 
capital management.						 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-01-827 					        
    ACCNO:   A01321						        
  TITLE:     Department of Education: Status of Achieving Key Outcomes
             and Addressing Major Management Challenges                       
     DATE:   06/29/2001 
  SUBJECT:   Performance measures				 
	     Aid for education					 
	     Internal controls					 
	     Personnel management				 
	     Reporting requirements				 
	     Strategic planning 				 
	     GPRA						 
	     Government Performance and Results Act		 

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GAO-01-827
     
Report to the Ranking Minority Member, Committee on Governmental Affairs, U.
S. Senate

United States General Accounting Office

GAO

June 2001 DEPARTMENT OF EDUCATION

Status of Achieving Key Outcomes and Addressing Major Management Challenges

GAO- 01- 827

Page i GAO- 01- 827 Department of Education?s Status of Achieving Key
Outcomes Letter 1

Results in Brief 2 Background 4 Assessment of the Department of Education?s
Progress in

Accomplishing Selected Key Outcomes 6 Comparison of the Department of
Education?s Interim Fiscal Year

2000 Performance Report With the Prior Year Report for Selected Key Outcomes
12 The Department of Education?s Efforts to Address the Major

Management Challenges Identified by GAO 13 Conclusions 14 Recommendations
for Executive Action 15 Scope and Methodology 15 Agency Comments 16

Appendix I Observations on the Department of Education?s Efforts to Address
Its Major Management Challenges 17

Appendix II Comments From the Department of Education 21

Table

Table 1: Major Management Challenges. 17

Abbreviations

Education Department of Education GPEA Government Paperwork Elimination Act
GPRA Government Performance and Results Act of 1993 OIG Office of Inspector
General OMB Office of Management and Budget OSFA Office of Student Financial
Assistance Contents

Page 1 GAO- 01- 827 Department of Education?s Status of Achieving Key
Outcomes

June 29, 2001 The Honorable Fred Thompson Ranking Minority Member Committee
on Governmental Affairs United States Senate

Dear Senator Thompson: As you requested we reviewed the Department of
Education?s (Education) fiscal year 2000 performance report required by the
Government Performance and Results Act of 1993 (GPRA). 1 In April 2001,
Education issued an ?interim? fiscal year 2000 performance report that
included some preliminary fiscal year 2002 performance plan program data but
did not include any information on strategies to meet unmet performance
goals. Education termed the performance report ?interim? because it did not
issue an accompanying department- wide fiscal year 2002 performance plan.
According to Education officials, the data in the interim report includes
the department?s final data for fiscal year 2000 and, in that respect, the
report can be considered final. The interim report stated that Education
planned to issue the department- wide performance plan for fiscal year 2002
by September 30, 2001. According to Education officials, the delay is due to
a lack of senior leadership at the department 2 and Education?s desire to
integrate key strategies from the President?s education proposal 3 and from
a team of Education senior staff who have been tasked with fixing the
department?s management problems.

As agreed with your office, we reviewed the interim fiscal year 2000
performance report to assess Education?s progress in achieving selected key
outcomes that you identified as important mission areas for the department.
These are generally the same outcomes we addressed in our June 2000 review
of the agencies? fiscal year 1999 performance reports and

1 Our report is one of a series on the 24 Chief Financial Officers Act
agencies? fiscal year 2000 performance reports and fiscal year 2002
performance plans. 2 As of June 2001, only 2 political leadership appointees
out of a total 16 had been nominated and confirmed by the Senate for the
Department of Education. 3 As of June 2001, the bill H. R. 1, entitled: To
close the achievement gap with accountability, flexibility, and choice, so
that no child is left behind, had passed both the House of

Representatives and the Senate.

United States General Accounting Office Washington, DC 20548

Page 2 GAO- 01- 827 Department of Education?s Status of Achieving Key
Outcomes

fiscal year 2001 performance plans 4 to provide a baseline by which to
measure the agencies? performance from year- to- year. These selected key
outcomes are:

 All students reach challenging academic standards that prepare them for
responsible citizenship, further learning, and productive employment.

 All children receive a solid foundation for learning.

 Greater public school choice available to students and families.

 Strong, safe, disciplined, and drug- free schools.

 Less fraud, waste, mismanagement, and error in student financial
assistance programs.

 All students have access to high- quality postsecondary education and
lifelong learning.

As agreed, using the selected key outcomes for the Department of Education
as a framework, we (1) assessed the progress Education has made in achieving
these outcomes and (2) compared Education?s interim fiscal year 2000
performance report with the agency?s prior year performance report for these
outcomes. Additionally, we agreed to analyze how Education has addressed its
major management challenges, including the governmentwide high- risk areas
of strategic human capital management and information security that we and
Education?s Office of the Inspector General identified. Appendix I provides
detailed information on how Education addressed these challenges. (App. II
contains Education?s comments on a draft of our report).

It was difficult to fully assess Education?s progress in achieving the six
outcomes due to the limited scope of the interim report- no fiscal year 2000
data for many indicators, no discussion of why goals were not met, and no
strategies on how the department would reach its goals. Also, the absence of
a fiscal year 2002 performance plan made assessing Education?s progress
difficult. None of the outcomes included goals or measures associated with
human capital management.

Planned outcome: All students reach challenging academic standards that
prepare them for responsible citizenship, further learning, and productive
employment. Education reported that it made little progress in achieving

4 Observations on the Department of Education?s Fiscal Year 1999 Performance
Report and Fiscal Year 2001 Performance Plan, (GAO/ HEHS- 00- 128R, June 30,
2000). Results in Brief

Page 3 GAO- 01- 827 Department of Education?s Status of Achieving Key
Outcomes

this outcome. The interim report contained seven objectives and 35
indicators for this outcome; however, fiscal year 2000 data were only
available for nine indicators. In analyzing these nine indicators, we found
that Education had made little progress toward achieving the outcome.
Specifically, Education reported that it had not met two goals related to
challenging content and student performance standards- goals that are
directly related to the achievement of the outcome. Of the remaining seven
indicators, goals were met for three. These three are linked to the outcome,
but they provide only limited information with which to judge progress.
Additionally, for the six indicators with unmet goals, there was minimal
discussion of why the goals were not met.

Planned outcome: All children receive a solid foundation for learning. The
interim report indicated that little progress was demonstrated for this
outcome. As with other outcomes, data needed to evaluate progress is not
collected annually, making an annual assessment of progress difficult. In
addition, we found that those few indicators with data- only two- did not
provide much information on Education?s progress in meeting this outcome.

Planned outcome: Greater public school choice available to students and
families. The interim report indicated that progress was made in addressing
this outcome. For example, Education reported that it is on track to meet
its goal that by 2002 there will be 3,000 charter schools in operation
around the nation. Of the remaining two indicators that specifically address
this outcome, one goal was not met and data were unavailable for the other.

Planned outcome: Strong, safe, disciplined, and drug- free schools.
Education reports that it expects to make progress in meeting this outcome
based on national trend data. However, consistent with our findings from
last year?s performance report, we continue to have concerns about the
narrow scope of the proxies Education uses to measure the indicators for
this outcome. Education continues to use marijuana use as a proxy to measure
all drug use and physical fights as a proxy for all violent behavior.

Planned outcome: Less fraud, waste, mismanagement, and error in student
financial assistance programs. Education did not establish a fiscal year
2000 performance goal or objective to address this outcome. However, in
analyzing a section of the interim report designed to address management
challenges facing Education, we found that Education had at least partially
addressed this outcome. For example, Education stated that it is making

Page 4 GAO- 01- 827 Department of Education?s Status of Achieving Key
Outcomes

progress towards ensuring financial integrity- a necessary part of achieving
this outcome. According to Education officials, future performance plans may
include goals and measures to specifically address this outcome.
Additionally, Education has revised its strategic plan to include an
objective of ensuring financial integrity within the department.

Planned outcome: All students have access to high- quality postsecondary
education and lifelong learning. Education reported that it continued to
make progress towards achieving this outcome. Education used a combination
of postsecondary enrollment rates, amount of unmet financial need, customer
satisfaction, and rates of employment to measure its progress. We found,
however, that Education?s progress in meeting this outcome is mixed.

In comparing last year?s fiscal year 1999 performance report to the interim
fiscal year 2000 report, we found that the interim report was less helpful
in providing an overall view of Education?s progress because it did not
include discussions of why goals were not met and there was no fiscal year
2002 performance plan to provide information on strategies for meeting its
goals. The interim report did contain, however, a new section for addressing
management challenges identified by GAO, Education?s Office of Inspector
General (OIG), and others. In this section, Education reported on over half
of the 14 major management challenges we and the OIG identified. The section
included a discussion of the challenge, and in some cases, strategies for
addressing the challenge along with some related performance goals.

In this report, we make recommendations that Education take steps to
initiate discussions with appropriate congressional committees regarding the
lack of annual performance data. Additionally, we recommend that Education
develop specific goals and measures to address the high- risk areas of
student financial assistance programs and strategic human capital
management. In written comments on our draft report, Education generally
agreed with our conclusions and recommendations and addressed the lack of
information about future strategies and discussed steps it is taking to
address its management challenges. Separately, Education also provided oral
technical comments, which we incorporated when appropriate. Education?s
written comments are printed in appendix II.

GPRA is intended to shift the focus of government decisionmaking,
management, and accountability from activities and processes to the
Background

Page 5 GAO- 01- 827 Department of Education?s Status of Achieving Key
Outcomes

results and outcomes achieved by federal programs. New and valuable
information on the plans, goals, and strategies of federal agencies has been
provided since federal agencies began implementing GPRA. Under GPRA, annual
performance plans are to clearly inform the Congress and the public of (1)
the annual performance goals for agencies? major programs and activities,
(2) the measures that will be used to gauge performance, (3) the strategies
and resources required to achieve the performance goals, and (4) the
procedures that will be used to verify and validate performance information.
These annual plans, issued soon after transmittal of the President?s budget,
provide a direct linkage between an agency?s longer- term goals and mission
contained in its strategic plan and its day- to- day activities. 5 Annual
performance reports are to subsequently report on the degree to which
performance goals were met. The issuance of the agencies? performance
reports, due by March 31, represents a newer and potentially more
substantive phase in the implementation of GPRA- the opportunity to assess
federal agencies? actual performance for the prior fiscal year and to
consider what steps are needed to improve performance and reduce costs in
the future. 6

Education?s mission is to ensure equal access to education and to promote
educational excellence throughout the nation. This year?s interim
performance report listed the following four department- wide strategic
goals: (1) help all children reach challenging academic standards so that
they are prepared for responsible citizenship, further learning, and
productive employment; (2) build a solid foundation for learning for all
children; (3) ensure access to postsecondary education and lifelong
learning; and (4) make Education a high- performance organization by
focusing on results, service quality, and customer satisfaction. For each
goal, Education has established various objectives, and for each objective
there were indicators with which to measure its progress. Additionally, in
the interim fiscal year 2000 program performance report, Education presents
program data for about 180 Education programs. This program report includes
some information on planned fiscal year 2002 performance (e. g., program-
level targeted goals) and a section explaining how Education plans to
address some of the management challenges identified by GAO and others.
Where applicable, in addition to the information in the

5 The fiscal year 2002 performance plan will be the fourth of these annual
plans under GPRA. 6 The fiscal year 2000 performance report is the second of
these annual reports under GPRA.

Page 6 GAO- 01- 827 Department of Education?s Status of Achieving Key
Outcomes

interim performance report, we used indicator data from the interim program
performance report to help assess Education?s progress in achieving the
selected outcomes. Additionally, we used the management challenges section
to help identify progress and planned activities in this area.

This section discusses our analysis of Education?s performance in achieving
the six selected key outcomes. We will not be able to discuss strategies
that Education has in place to achieve these outcomes because Education has
not yet provided this information. Education officials told us that these
strategies will be included in the fiscal year 2002 departmentwide
performance plan scheduled to be issued by September 30, 2001. In discussing
the extent to which the agency provided assurance that the performance
information it is reporting is credible, we have drawn information from our
prior work.

Additionally, due to the nature of the performance information it was
difficult to assess Education?s progress for some outcomes. To measure
success in some areas, Education relied on long- term trend data that is
collected only every 2, 3, 4, or 6 years. These gaps in data make a full
analysis of Education?s progress difficult. In January of this year, we
reported that Education needed to improve the quality and timeliness of the
data on which its programs are evaluated. 7 Without taking this step,
Education will continue to be challenged in assessing its progress for the
selected outcomes on an annual basis.

The interim report showed that Education made little progress in achieving
this outcome. Education has seven performance objectives and 35 indicators
to measure progress toward achieving this outcome. Of the 35 indicators
related to this outcome, fiscal year 2000 data were only available for nine
indicators. Due to the lack of fiscal year 2000 data for this outcome, we
limited our analysis to these nine indicators and found that Education made
little progress toward this outcome.

Specifically, Education reported that it had not met two goals related to
challenging content and student performance standards- goals that are

7 Major Management Challenges and Program Risks: Department of Education
(GAO- 01- 245). Assessment of the

Department of Education?s Progress in Accomplishing Selected Key Outcomes

Challenging Academic Standards That Prepare Students For Responsible
Citizenship, Further Learning, And Productive Employment

Page 7 GAO- 01- 827 Department of Education?s Status of Achieving Key
Outcomes

directly related to the achievement of the outcome. As a first step, before
all students can reach challenging standards that prepare them for
responsible citizenship, further learning, and productive employment,
challenging content and student performance standards must be in place. One
of the 35 performance indicators, ?by the end of the 1997- 98 school year,
all states will have challenging content and student performance standards
in place for two or more core subjects,? focuses on this prerequisite, which
had not been achieved by the end of 2000. Twentyseven states and Puerto Rico
had demonstrated to Education that they had completed the development of
both content and student performance standards. Education had approved the
content standards development process for the District of Columbia, Puerto
Rico, and all states, except one. In its assessment of progress for this
indicator, Education explains that rather than developing student
performance standards as a template for assessments, which were not
scheduled to be in place until the 2000- 01 school year, many states are
developing their assessment instruments first and then constructing
performance standards on the basis of pilot tests of their assessments.

In looking at the remaining seven indicators with data, Education reported
that the goal was met in three instances and not met in the other four. All
three of the indicators with goals met are linked to the outcome, but
provide only limited information with which to judge progress. For all six
indicators with unmet goals, there was minimal discussion of why the goals
were not met.

The interim report showed that little progress has been demonstrated for
this outcome. Education established 18 indicators to address the goal of
building a solid foundation for learning for all children. According to the
interim performance report, data for fiscal year 2000 were only available
for two indicators- for both of which the goals were met. According to
Education officials, 2000 data will be provided in the future as data become
available from the states. However, these two indicators alone,

?number of tutors in the America Reads program? and ?that more than 35
percent of Title I 8 schools adopt a researched- based way to improve
curriculum,? do not provide sufficient information with which to gauge
progress toward meeting the outcome. As with of some of the other

8 Title I is the largest federal elementary and secondary education program
and is designed to help schools meet the needs of economically and
educationally disadvantaged students. A Solid Foundation For

Learning

Page 8 GAO- 01- 827 Department of Education?s Status of Achieving Key
Outcomes

outcomes, data necessary to evaluate progress is not collected annually,
making an annual assessment of progress difficult.

According to the interim report, Education?s performance objective to have
greater public school choice available to students and families has been at
least partially met. The interim fiscal year 2000 performance report
indicated that the interim target for one of the three indicators- that by
2002, there will be 3,000 charter schools in operation around the nation-
was exceeded. The interim target for fiscal year 2000 relating to this
indicator was 2,060 charter schools; 2,110 were actually in operation.
However, the report notes that the majority of the charter schools are
located in only seven states.

According to the interim performance report, data for fiscal year 2000 are
not yet available for one indicator- that by 2003, 25% of all public school
students in grades K- 12 will attend a school that they or their parents
have chosen.

For the third indicator- that by 2000, a minimum of 40 states will have
charter school legislation- the goal was not met. From 1991, when Minnesota
became the first state to enact charter school legislation, other states
joined steadily until 1999, when the list totaled 38 and remained at 38
through 2000. There was no discussion on why the goal was not met, or why
only 40 states are included in the goal.

According to the interim report, there was limited progress in meeting this
outcome. Education measures progress for this outcome by looking at the
national trends in student drug and alcohol use, including in- school use,
and national trends in student victimization and violent incidents in
schools. Of the four indicators, Education expects progress in three based
on national drug use and violent crime trends, and the goal was partially
met for one- reducing the prevalence of past- month use of illicit drugs.
Specifically, we have the following comments on these indicators:

 Of the four indicators, two are for measuring violent behavior and two are
for drug and alcohol use. For both violent behavior indicators, data is not
available for fiscal year 2000; however, Education has concluded that
progress is likely. In making this determination, Education is using
national statistics demonstrating that there has been a decrease in the
overall juvenile crime and violence rates since the mid- 1990s. The data for
one indicator- the level of disorder in schools- tracks only physical fights
on school property; no reasons were given as to why other disciplinary
Public School Choice

Strong, Safe, Disciplined, And Drug- Free Schools

Page 9 GAO- 01- 827 Department of Education?s Status of Achieving Key
Outcomes

problems were not tracked. However, our recent report on discipline showed
that fistfights are the most prevalent form of serious misconduct and,
therefore, probably the best proxy measure to use when only one behavior is
being tracked. 9 According to Education, data should be available within the
next few years to measure actual progress for both indicators for this
outcome.

 From the indicators on drug and alcohol use, it appears that progress is
mixed. Education did not meet its goal for past- month alcohol and illicit
drug use for 2000; however, Education reports that alcohol use levels have
remained relatively steady for years and stated that illicit drug use may
have leveled off in recent years, according to national trend data. For the
second indicator- rates of in- school alcohol and drug use will begin to
fall by 2001- Education reports that progress toward this goal is likely. It
based its estimation of success on the fact that the goals for both alcohol
and drug use for 1999 were exceeded (even beyond the 2000 goal level) and
that overall alcohol and drug use rates have remained steady for years.
However, as we noted in last year?s report, Education is using alcohol and
marijuana use by 12th graders as a proxy for all alcohol and drug use,
respectively. Education does not provide an explanation as to why only
marijuana was used for this indicator. In response to our report last year,
Education acknowledged that we were correct in our observation that the
indicator is narrow in scope and stated that it intended to address this in
its fiscal year 2002 plan.

Education did not establish a fiscal year 2000 performance goal or objective
to specifically address this outcome. In a section designed to address
management challenges facing Education, the interim performance report does
report progress towards achieving a related objective: management of
department programs and services ensures financial integrity. This is
presented as a department- wide objective and does not discuss progress or
performance for any specific programs. The discussion of this objective
lists several actions Education?s Office of the Chief Financial Officer is
taking to accomplish it. These actions include implementing a new general
ledger software system; enhancing internal controls, reconciliation, and
reporting processes; and improving acquisition systems. According to
Education officials, future performance plans may include goals and measures
to specifically address this

9 Student Discipline: Individuals With Disabilities Education Act (GAO- 01-
210, Jan. 25, 2001). Fraud, Waste,

Mismanagement, And Error In Student Financial Assistance Programs

Page 10 GAO- 01- 827 Department of Education?s Status of Achieving Key
Outcomes

outcome. Additionally, Education has revised its strategic plan to include
an objective of ensuring financial integrity within the department.

Based on the two indicators identified for the financial integrity
objective, progress in achieving this objective is mixed. The first
indicator, that Education will receive an unqualified opinion on its fiscal
year 2000 financial statement audit, was unmet. However, because the
auditors identified fewer material weaknesses and reportable conditions
related to Education?s internal control systems than they found in last
year?s audit, Education states that it is making progress. For the second
indicator, Education reported that it achieved its target for increasing the
use of performance contracts.

In the management challenges section of the interim report, Education
established a target to remove the student financial assistance programs
from GAO?s high- risk list. Education lists several actions, such as
developing a corrective action plan, to address program weaknesses. There
were, however, no specific goals or measures for this challenge. As we
reported to you last year in our assessment of Education?s fiscal year 2001
performance plan, we continue to believe the department should have a goal
or objective to specifically address this outcome. The student aid programs
remain on GAO?s high risk- list, and we recently testified on serious
internal control weaknesses we identified in a review of the department?s
payment practices. 10 For example, we stated Education had poor segregation
of duties for making payments because some individuals at the department
could control the entire payment process- leaving Education at risk for
fraud. Also, we cited the need for Education to have better controls over
its process for reviewing and approving purchases made with government
purchase cards.

In addition to establishing the target of getting off of GAO?s high- risk
list, Education created a task force- or Management Improvement Team- to
achieve this result. Among other things, the task force is charged with (1)
obtaining a clean audit opinion, (2) removing the student financial aid
programs from GAO?s high- risk list, (3) putting in place an effective
system of internal controls to protect against waste, fraud, and abuse, and
(4) continuing to modernize student aid delivery and management.

10 Financial Management: Internal Control Weaknesses Leave Department of
Education Vulnerable to Improper Payments, GAO- 01- 585T, April 3, 2001.

Page 11 GAO- 01- 827 Department of Education?s Status of Achieving Key
Outcomes

The interim report shows that Education?s progress in meeting this goal was
mixed. One of Education?s four strategic goals is to ensure access to
postsecondary education and lifelong learning. We examined the four
objectives and 16 indicators for this goal to determine progress in meeting
this outcome. Education used a combination of enrollment rates, amount of
unmet financial need, customer satisfaction, and rates of employment to
measure its progress for this goal. Of the 16 indicators, we found that
Education had met or exceeded its targets for five. For the remaining 11
indicators, however, there were no fiscal year 2000 data available to
measure actual progress. We have the following observations on the
indicators:

 Education had two objectives and nine indicators to measure progress in
the areas of ensuring access to postsecondary education. Indicators include
enrollment rates, rates at which parents and students request/ receive
information on admission standards and financial aid, and the amount of
unmet financial need that exists for students. In general, the indicators
present a mixed picture of Education?s success in achieving this outcome. Of
the nine indicators, the goal was met or exceeded for two; no data were
available for the remaining seven indicators. Additionally, in looking
specifically at the indicators, we found for one indicator classified as
goal met- participants receiving support services- the data were from 1997
and the report did not discuss any planned updates for more current data.

 For Education?s objective of delivering student aid in an efficient,
financially sound, and customer- responsive manner, there were no unmet
indicators. For this objective?s three indicators, Education reported that
the Office of Student Financial Assistance (OSFA) either met or exceeded its
target. For example, in measuring customer satisfaction with OSFA?s products
and services, Education found that, not only was the indicator of improving
OSFA?s rating met, but the office was only one percentage point away from
meeting its multi- year target of a customer satisfaction rating comparable
to the private financial services sector average.

 Education used four indicators to measure its progress toward meeting the
objective that all educationally disadvantaged adults can strengthen their
literacy skills and improve their earning power over their lifetime through
lifelong learning. No fiscal year 2000 data were available for these
indicators. In addition to the lack of current data, the data for all four
were limited because information is collected and reported by state and
local service providers and in some instances, there is no independent
verification of the data. Access To A High- Quality

Postsecondary Education And Lifelong Learning

Page 12 GAO- 01- 827 Department of Education?s Status of Achieving Key
Outcomes

For the selected key outcomes, this section describes major improvements or
remaining weaknesses in Education?s interim fiscal year 2000 performance
report in comparison with its fiscal year 1999 report.

One prominent weakness in last year?s performance report- a lack of data for
the reporting period- continues in the interim fiscal year 2000 report.
Specifically, Education did not have fiscal year 2000 performance data for
over three- fourths of the goals associated with the outcomes we looked at.
According to Education officials, 2000 data will be provided in the future
as data become available.

The biggest difference in the reports is the lack of a discussion on how
Education plans to achieve its objectives and unmet goals. Additionally,
only limited explanations were given as to why goals were unmet. Education
officials told us that they did not want to pursue a planning effort-
including activities related to how the department plans to achieve its
objectives- until senior leadership has been appointed and the President?s
education proposal is passed into law. Instead, as stated earlier, Education
wants to wait and incorporate any changes in departmental strategies in the
final fiscal year 2002 performance plan scheduled to be issued by September
30, 2001.

The biggest improvement to this year?s report is the addition of a section
dealing with some of the major management challenges. In this section,
Education discussed over half of the 14 major management challenges facing
the department as identified by GAO and Education?s OIG. According to
Education officials, it decided not to report on those management challenges
for which plans from the new administration might affect the strategy for
addressing the challenge. More specifically, Education addressed those
challenges for which the course of action would be the same regardless of
the department?s leadership or the contents of new education legislation.
For example, one management challenge that Education addressed was to ensure
financial integrity; this needed to be addressed no matter who leads the
agency or what is included in the President?s education proposal.
Conversely, Education wanted to wait to address the management challenge to
promote coordination with other federal agencies and school districts to
help build a solid foundation of learning for all children. According to a
departmental official, Education plans on integrating actions needed to
address this challenge with actions needed to address other proposed
initiatives from the new administration. Comparison of the

Department of Education?s Interim Fiscal Year 2000 Performance Report With
the Prior Year Report for Selected Key Outcomes

Page 13 GAO- 01- 827 Department of Education?s Status of Achieving Key
Outcomes

In general, the section was helpful in that it outlined the scope of the
challenges, identified some performance indicators to be used to assess
progress in meeting the challenges, and detailed some strategies to address
the challenges. Of the eight challenges discussed in the section, there was
a range of thoroughness with which the challenges were addressed. For
example, some challenges were mentioned briefly with a short discussion of
the status of the challenge and no discussion of goals or measures; other
challenges were discussed in- depth with comprehensive discussions of
strategies and detailed goals and measures set out. Education officials told
us that they plan on addressing more of the challenges in the department-
wide performance plan scheduled to be issued September 30, 2001.

GAO has identified two governmentwide high- risk areas: strategic human
capital management and information security. Regarding strategic human
capital management, we found that Education?s interim performance report did
have some limited data related to human capital, but that the interim report
did not explain its progress in resolving human capital challenges. For
example, Education reported on the percentage of managers who believe their
staff possess adequate skills for their jobs; however, there was no broader
discussion of strategic human capital management such as leadership
continuity and succession planning. There was no discussion of strategic
human capital management in last year?s performance report or plan- no
specific goals, measure, or strategies. While noting that the department has
addressed strategic human capital management issues to a limited extent in
the agency?s revised strategic plan, Education officials told us that more
needs to be done by the department to address this serious issue.

With respect to information security, we found that Education?s performance
report noted that the department had recently updated security plans and
performed security reviews on almost all mission critical systems.
Additionally, in the management challenges section of the interim program
performance report, Education included management and performance goals for
completing specific security activities. For example, the report states that
100 percent of the department?s mission critical systems will have security
plans and tested contingency backup plans; however, no dates were associated
with these measures.

In addition to these governmentwide challenges, GAO has identified four
major management challenges facing Education, that generally encompass some
of the outcomes discussed in this report: improving financial The Department
of

Education?s Efforts to Address the Major Management Challenges Identified by
GAO

Page 14 GAO- 01- 827 Department of Education?s Status of Achieving Key
Outcomes

management to help build a high- performing agency; ensuring access to
postsecondary education while reducing the vulnerability of student aid to
fraud, waste, error, and mismanagement; encouraging states to improve
performance information; and promoting coordination with other federal
agencies and school districts to help build a solid foundation of learning
for all children. Education?s performance report discussed the department?s
progress in meeting the first two of these challenges. Additionally,
Education officials told us that the Secretary established the Management
Improvement Team to develop a plan to address Education?s management
challenges. Further, these officials said that the department has discussed
some of these issues in its revised strategic plan.

Education will continue to be challenged to improve its performance. In
general, given the lack of performance data, explanations, and strategies to
meet unmet goals in the future, it was difficult to assess progress. Also,
we could not assess planned progress given the lack of a performance plan.

Specifically, we found that it was difficult to assess Education?s progress
in achieving the six outcomes due to the lack of fiscal year 2000 data for
many of its indicators. The non- annual reporting structure of many studies
used for Education?s goals make the lack of fiscal year data a perennial
problem in addressing Education?s progress on an annual basis. Education
will continue to have difficulty in fulfilling its task of annual reporting
given the large gaps in reportable annual data.

Consistent with our findings in reviewing Education?s performance report
from last year, we found that Education had no goals or measures associated
with the outcome of preventing fraud, waste, mismanagement, and error in the
student financial assistance programs. We put the student financial
assistance programs on our high- risk list because they are vulnerable to
fraud, waste, abuse, and mismanagement. While OSFA has established a target
of being removed from GAO?s high- risk list, there were no corresponding
goals or measures in the department?s interim report. However, Education has
revised its strategic plan to incorporate an objective of ensuring financial
integrity within the department. Education officials also told us that they
may include in future performance plans specific goals and measures related
to this outcome.

Finally, in last year?s assessment of Education?s performance plan and
report, we noted that there was no discussion of how human capital would
have supported achievement of the outcomes. We found that similarly for
Conclusions

Page 15 GAO- 01- 827 Department of Education?s Status of Achieving Key
Outcomes

this year, there was no discussion in the interim report on strategic human
capital management.

To improve Education?s future performance reports and plans, we recommend
that the Secretary of Education take the following actions:

 Initiate a dialogue with the appropriate congressional committees to
discuss the lack of annual reporting data and what this means with respect
to how management at the department is most appropriately assessed and how
Education could be more responsive to Congress in fulfilling its annual GPRA
reporting requirements.

 Develop performance goals and measures to address the outcome of less
fraud, waste, mismanagement, and error in student financial assistance
programs.

 Develop specific goals and measures to be included in future performance
reports and plans to address the issue of strategic human capital
management.

As agreed, our evaluation was generally based on the requirements of GPRA,
the Reports Consolidation Act of 2000, guidance to agencies from the Office
of Management and Budget (OMB) for developing performance plans and reports
(OMB Circular A- 11, Part 2), previous reports and evaluations by us and
others, our knowledge of Education?s operations and programs, GAO?s
identification of best practices concerning performance planning and
reporting, and our observations on Education?s other GPRA- related efforts.
We also discussed our review with agency officials in the department and
with the department of Education?s OIG. The agency outcomes that were used
as the basis for our review were identified by the Ranking Minority Member,
Senate Governmental Affairs Committee as important mission areas for the
agency and generally reflect the outcomes for all of Education?s activities.
The major management challenges confronting Education, including the
governmentwide high- risk areas of strategic human capital management and
information security, were identified by GAO in our January 2001 performance
and accountability series and high risk update, and were identified by the
Department of Education?s OIG in December 2000. We did not independently
verify the information contained in the performance report and plan,
although we did draw from other GAO work in assessing the validity,
reliability, and timeliness of Education?s performance data. We conducted
our review from April 2001 through June 2001 in accordance with generally
accepted government auditing standards. Recommendations for

Executive Action Scope and Methodology

Page 16 GAO- 01- 827 Department of Education?s Status of Achieving Key
Outcomes

On June 28, 2001, we obtained written comments on our draft report from the
Deputy Secretary of Education. Education generally agreed with our
conclusions and recommendations. The Deputy Secretary said that he and the
Secretary share many of our concerns about the Department's strategic
planning process and management challenges and that Education has taken
steps to tackle these issues, including a top- to- bottom review of its
strategic planning process and the formation of a team of senior staff to
fix the department's management and fiscal accounting problems. In addition,
the Deputy Secretary cited anticipated sweeping changes to America's schools
and the Department resulting from the reauthorization of the Elementary and
Secondary Education Act and other reauthorizations as the rationale for not
including strategies for achieving its objectives in the interim fiscal year
2000 performance report. Education also provided oral technical comments on
our draft report, which we incorporated when appropriate. Education's
written comments are printed in appendix II.

As arranged with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days after
the date of this letter. At that time, we will send copies to appropriate
congressional committees; the Secretary of Education; and the Director,
Office of Management and Budget. Copies will be made available to others on
request.

If you or your staff have any questions, please call me at (202) 512- 7215.
Key contributors to this report were David Alston, Jeff Appel, Kelsey
Bright, Cheryl Driscoll, Joy Gambino, Eleanor Johnson, Gilly Martin, Joel
Marus, and Glenn Nichols.

Sincerely yours, Cornelia M. Ashby Director, Education, Workforce,

and Income Security Issues Agency Comments

Appendix I: Observations on the Department of Education?s Efforts to Address
Its Major Management Challenges

Page 17 GAO- 01- 827 Department of Education?s Status of Achieving Key
Outcomes

The following table identifies the major management challenges confronting
the Department of Education, which include the governmentwide high- risk
areas of strategic human capital management and information security. The
first column lists the challenges identified by our office and/ or the
Department of Education?s Office of Inspector General (OIG). The second
column discusses what progress, as discussed in its fiscal year 2000 interim
performance report, Education made in resolving its challenges. As mentioned
in the body of this report, new to Education?s performance reporting this
year was a section entitled:

?Management Challenges: Successes and On- going Efforts.? We found this to
be a helpful tool for tracking Education?s progress in addressing some of
the management challenges.

We found, either in the management challenges section or elsewhere in the
report, that Education discussed the agency?s progress in resolving more
than half of the identified challenges.

Table 1: Major Management Challenges. Major management challenge

Progress in resolving major management challenge as discussed in the interim
fiscal year 2000 performance report GAO- designated governmentwide high risk

Strategic Human Capital Management: GAO has identified shortcomings at
multiple agencies involving key elements of modern human capital management,
including strategic human capital planning and organizational alignment;
leadership continuity and succession planning; acquiring and developing
staffs whose size, skills, and deployment meet agency needs; and creating
resultsoriented organizational cultures.

There were no goals or measures specifically related to this management
challenge in the interim report, however; Education had some related goals,
such as, 70% of respondents would agree that manager and employee knowledge
and skills are adequate to carry out Education?s mission. In this year? s
interim report, Education reported that only 59% of managers agreed with
that statement. This number is up from 57% in 1998. Information Security:
Our January 2001 high- risk series update noted that since our last high-
risk report in January 1999, efforts to strengthen information security have
gained momentum and expanded both at individual agencies and at the
governmentwide level. However, recent audits continue to show that federal
computer systems are riddled with weaknesses that make them highly
vulnerable to computer- based attacks and place a broad range of critical
operations and assets at risk of fraud, misuse, and disruption. Note: OIG
identified information security of department systems as a management
challenge. In addition, OIG reported information security as a material
weakness on the department?s fiscal year 2000 financial audit report.

Education addressed this issue in the management challenges section of the
interim report by including management performance goals for completing
specific security activities. Education acknowledged the security weaknesses
in its systems and reported information security controls as a material
weakness in its Federal Managers Financial Integrity Act report for 2000.
Education?s interim performance report noted that the department has
recently updated security plans and performed security reviews on almost all
mission critical systems. Further, the department reported that (1)
corrective actions related to these reviews and recent OIG audits were
underway and (2) these actions included security improvements in the network
firewall, tighter network access controls, and development and testing of
disaster recovery plans.

Appendix I: Observations on the Department of Education?s Efforts to Address
Its Major Management Challenges

Appendix I: Observations on the Department of Education?s Efforts to Address
Its Major Management Challenges

Page 18 GAO- 01- 827 Department of Education?s Status of Achieving Key
Outcomes

Major management challenge Progress in resolving major management challenge
as

discussed in the interim fiscal year 2000 performance report GAO- designated
major management challenges

Encouraging states to improve performance information and upgrade federal
evaluations used to assess how well all children reach challenging academic
standards.

The interim report?s section on management challenges discussed this issue,
however; there were no indicators of progress listed for this challenge.
Instead, the report lists the current situation related to the challenge,
several planned performance indicators, and several strategies for
addressing the challenge. For example, Education established the performance
indicator of continuously improving the accuracy and timeliness of data for
program performance measurement. As part of this effort, Education states
that it is establishing a database to track this indicator. Promoting
coordination with other federal agencies and school districts to help build
a solid foundation of learning for all children. This challenge was not
addressed in the interim report,

however; an Education official told us that it would be included in their
annual plan scheduled to be issued by September 30, 2001.

GAO- and OIG- designated major management challenges

Improving financial management to help build a high- performing agency:
Education continues to face serious financial management challenges that
hinder its ability to (1) obtain timely and complete financial information;
(2) decrease vulnerability to fraud, waste and mismanagement; (3) ensure
adequate accountability to taxpayers; (4) manage for results; and (5) help
decisionmakers make timely and informed judgments. Education?s Fiscal Year
2000 financial statement audit disclosed continuing weaknesses that have
prevented the agency from receiving a ?clean? or unqualified audit opinion.

Education addressed this issue in the management challenges section of the
interim report. Education did not meet its goal to receive a ?clean? audit
opinion on its fiscal year 2000 financial statements. The interim report
discussed various improvements Education is implementing to achieve a

?clean? opinion and eliminate reported internal control weaknesses. These
improvements include the phased implementation of a new general ledger
system, financial policies and procedures designed to enhance internal
controls, and reconciliation, and reporting processes. Although progress is
noted, material weaknesses from prior years remain in financial reporting,
reconciliations and information systems. Additionally, the performance
report does not discuss performance measures or targets related to
implementing additional compensating controls since significant weaknesses
exist in Education?s general ledger system. An example of a compensating
control is a review for duplicate or improper payments to ensure that errors
and irregularities are detected in a timely manner. The fiscal year 2000
financial statement audit report cited Education?s duplicate payments as
part of its financial management systems and financial reporting material
weakness. A related performance measure or target is to ensure that any
duplicate or improper payment is prevented and/ or detected in a timely
manner. Further, in the interim report, Education gives a count of three
material weaknesses and two reportable conditions found in the fiscal year
2000 financial statement audit but does not list or describe them. Education
also dropped from its interim report its fiscal year 2001 target of an
unqualified audit opinion and zero material weaknesses and reportable
conditions as shown in its fiscal year 1999 performance report.

Appendix I: Observations on the Department of Education?s Efforts to Address
Its Major Management Challenges

Page 19 GAO- 01- 827 Department of Education?s Status of Achieving Key
Outcomes

Major management challenge Progress in resolving major management challenge
as

discussed in the interim fiscal year 2000 performance report

Ensure access to postsecondary education while reducing the vulnerability of
student aid programs to fraud, waste, error, and mismanagement: In our June
2000 report on Education?s fiscal year 1999 performance report and fiscal
year 2001 performance plan 1 , we reported that Education did not have a
sound, integrated information technology strategy to manage its portfolio of
student aid information systems. Therefore, the department, guaranty
agencies, schools, and lenders often did not have the accurate, complete,
and timely information on program participants needed to effectively manage
the programs.

The management challenges section of Education?s interim performance report
includes a goal to remove the student financial aid programs from GAO?s
high- risk list. The report discusses Education?s progress in strengthening
financial management and internal controls for the student loan programs.
For example, the report states that the fiscal year 2000 audit report issued
in February 2001, did not disclose any weaknesses in the Office of Student
Financial Assistance (OSFA) monitoring area.

OIG- designated major management challenges

Fully implementing the Clinger- Cohen Act: This Act requires federal
agencies to significantly improve the acquisition and management of
information technology in order to advance mission performance and service
delivery.

Education discussed the implementation of the Clinger- Cohen Act in the
management challenges section of the interim report. There are no historical
data listed with which to gauge progress or reference to where such data may
be obtained. Instead, in terms of progress, the report discusses planned
measures such as that 80 percent of IT projects will be within 10 percent of
cost, schedule, and performance goals. Improving the department?s internal
controls: The department faces continued challenges to design and implement
effective internal controls. In addition, the OIG has been pursuing those
suspected of defrauding the federal government. (OIG has identified this
area as a separate major management challenge while GAO includes this area
in the broad category of improving financial management.)

This challenge was addressed in the interim report. Education did not
achieve its fiscal year 2000 goal of reducing its material internal control
weaknesses to zero. Education?s auditors? report on internal controls for
fiscal year 2000 included three material internal control weaknesses- all
longstanding from prior years. Education, however, did meet its target of
reducing its number of internal control reportable conditions to two.
Although improvement needed in communication and coordination efforts was
not considered a separate reportable condition, it was integrated within
other internal control issues in the auditors? report. Defining the role of
the Performance- Based Organization: OIG noted, for instance, that while
OSFA is afforded some procurement flexibilities through the PBO legislation,
some issues concerning proper delegations of authority for procurement vis-
ï¿½- vis the Secretary, have not been addressed.

This challenge was not addressed in the interim report. Obtaining
performance measurement and data quality for GPRA reporting. According to
the OIG, GPRA reporting requirements present two significant challenges to
Education: (1) to ensure the correct measures were selected and (2) to
ensure the source of the data is of sufficient quality.

This management challenge was briefly addressed in the interim report within
the challenge of improving the quality of state performance data. The short
section discussed the number of indicators (1082) reported as program
specific for fiscal year 2000. For these indicators, Education reports on
how many have current year data (20 percent), data from the prior year/
prior 2- years, and no data. Also, for each programlevel indicator,
Education has a section entitled the ?sources

and data quality.? This gives detailed information on the indicators as
assessed by Education. Additionally, the report contains the following
related indicator:

1 Observations on the Department of Education?s Fiscal Year 1999 Performance
Report and Fiscal Year 2001 Performance Plan (GAO/ HEHS- 00- 128R, June 30,
2000).

Appendix I: Observations on the Department of Education?s Efforts to Address
Its Major Management Challenges

Page 20 GAO- 01- 827 Department of Education?s Status of Achieving Key
Outcomes

Major management challenge Progress in resolving major management challenge
as

discussed in the interim fiscal year 2000 performance report

?By 2000, all Education Department program managers will assert that the
data used for their program?s performance measurement are reliable, valid,
and timely, or will have plans for improvement.? Education reported that
final data are not available for 2000, but that the 1999 data showed
progress towards the goal, with 85% of the managers reporting that the data
are of high quality. Implementing a student financial assistance
modernization blueprint and performance plan. According to the OIG, the
blueprint will be a significant challenge for OSFA and will largely depend
on its ability to re- engineer processes and modernize its systems.

This challenge was not addressed in the interim report. Moving to a
paperless environment. Education is required to implement the Government
Paperwork Elimination Act (GPEA) that requires it to move to electronic
government by October 21, 2003.

This challenge was addressed in the management challenges section of the
interim report. In terms of reporting on progress, Education noted that it
had submitted a GPEA plan to the Office of Management and Budget (OMB) that
identified about 300 Paperwork Reduction Act transactions to determine the
practicability of offering electronic alternatives to conducting these
transactions. Balancing compliance monitoring and technical assistance in
the oversight of Education programs: The department should strengthen its
compliance monitoring efforts in order to enhance oversight and integrity of
federal education programs.

This challenge was not addressed in the interim report. Obtaining income
verification from the Internal Revenue Service (IRS): Education remains
challenged in obtaining its legal authority to match self- reported income
on applications for federal student financial aid with IRS data on actual
income reported for tax purposes. IRS maintains that in order to implement
this provision, Congress would need to specifically change the disclosure
provisions in the Internal Revenue Code.

This challenge was not addressed in the interim report.

Appendix II: Comments From the Department of Education

Page 21 GAO- 01- 827 Department of Education?s Status of Achieving Key
Outcomes

Appendix II: Comments From the Department of Education

Appendix II: Comments From the Department of Education

Page 22 GAO- 01- 827 Department of Education?s Status of Achieving Key
Outcomes (130038)

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